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Cheerful1
New Member

Water damage. I upgraded floor and paid add'l $ than what the ins. co. paid. Would the total cost of the new floor basis for depreciation?

I have a rental and have a question. New floors were replaced due to water damage. I upgraded floor and paid additional money than what the insurance company paid. 
For example I paid $5000 more for more flooring.  Insurance paid $20000
Is floor basis for depreciation now $25000 or $5000
If $25000 is insurance portion of $20000 income that is reported somewhere?

1) Would the cost of the new floor basis be the total paid on the floor or just my portion? 

2) If total do I put insurance company payment as income somewhere?
1 Best answer

Accepted Solutions
DDollar
Level 7

Water damage. I upgraded floor and paid add'l $ than what the ins. co. paid. Would the total cost of the new floor basis for depreciation?

You basis in the new Floor, according to your example would be $5,000.  The $20,000 that insurance paid does not need to be reported, unless the insurance company issued you a Form 1099-MISC.  In this case, I would report it as income and add an expense of $20,000 to offset it - net Zero.

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3 Replies
DDollar
Level 7

Water damage. I upgraded floor and paid add'l $ than what the ins. co. paid. Would the total cost of the new floor basis for depreciation?

You basis in the new Floor, according to your example would be $5,000.  The $20,000 that insurance paid does not need to be reported, unless the insurance company issued you a Form 1099-MISC.  In this case, I would report it as income and add an expense of $20,000 to offset it - net Zero.

Cheerful1
New Member

Water damage. I upgraded floor and paid add'l $ than what the ins. co. paid. Would the total cost of the new floor basis for depreciation?

DDollar
Level 7

Water damage. I upgraded floor and paid add'l $ than what the ins. co. paid. Would the total cost of the new floor basis for depreciation?

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